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2 Strategic partnership with the London Stock Exchange Group What? Covering Listed equities Fixed income Derivatives Why? To benefit customers of both exchanges by creating new investment and trading opportunities Respects and supports organisational independence How? First step: Oslo Børs migrate to LSEGs trading systems Lays groundwork for wider collaboration on extending existing products and services to each others customers 2

3 Key areas of collaboration Same trading system, TradElect, and harmonised trading model - Facilitate efficient access between London, Milan and Oslo markets for cash equities - Laying groundwork for exploring potential for cross membership Common derivatives trading platform SOLA for Oslo Børs and EDX - Shared order books and joint product development - SOLA is developed by the TMX Group - Used by Montreal Exchange and Boston Option Exchange Co-operation in market surveillance and regulation - Work closely on market surveillance, included related technological co-operation - Regulatory policies, operational regulatory processes and sharing of market information for regulatory purpose Co-operation on market and product development 3

4 New trading platforms TradElect is the cash trading platform developed by London Stock Exchange (LSE) - Used by LSE, Borsa Italiana (BIt) and Johannesburg Stock Exchange for equities - BIt migrates its fixed income market to TradElect in Will be Oslo Børs new trading platform for equities and fixed income Infolect will become the new platform for market data feed - Used by LSE and BIt - Well integrated with TradElect SOLA is the derivatives trading platform developed by the TMX Group - Will be Oslo Børs and EDX new trading platform for derivatives - Used by Montreal Exchange - Used by Boston Option Exchange 4

9 Roadmap to launch Bilateral Nordic Link between EDX and Oslo Børs to commence in November 2009 on SOLA Trading and new trading and clearing interfaces In summary, the new Link will operate in a similar way it does today with enhancements: - Enhanced clearing link between Oslo Clearing and LCH.Clearnet. Oslo Clearing will use SECUR (no change) - EDX and OB products will continue joint orderbook trading through SOLA - Improved market model following customer consultation Current multilateral Nordic Link between EDX, Oslo Børs and NASDAQ OMX to end on 18 December 2009 Oslo Børs will keep close dialogues with ISVs to enable them to offer services related to new system interfaces 9

10 SOLA Trading Operated by TMX Group - Largest exchange in Canada - TMX created through the merger between Toronto and Montreal exchanges in Developed by Montreal Exchange in 2000 SOLA uses: - Trades Canadian equity and fixed income derivatives - Used by Boston Options Exchange to trade US equity options - Licensed by LSEG for use by EDX London and Oslo Børs 10

12 Market model and functionality Cash equities 12 - Oslo Børs will to the extent possible harmonize with LSE s market model - Existing products on Oslo Børs and Oslo Axess will be supported - Preferrencing in order execution - Post trade transparency in certain segments under discussion - Lot size 1 will become standard - Front office solutions will have to be adapted for members who do not have TradElect today Fixed income - Existing products on Oslo Børs and Oslo ABM will be supported - Changes from today s Oslo Børs market model will be needed - The Saxess Trade terminal will have to be replaced - Members using other front end solutions will have to adapt those Derivatives - Existing products on Oslo Børs and EDX will be supported

13 Participant structure Member ID Linked to market (exchange) (Some members may have a new/changed ID and/or mnemonic) Trader Group All authorisations and enablements to undertake activity are set at this level. Separate groups for AOR, Algo trading, Manual trading Trader ID This field is optional Role Set at Segment level; e.g. report trade, insert order etc. Applies to Trader Group 13

19 Hidden orders Consideration must be more than large in size (ref MiFID) Hidden Limit Hidden Pegged Orders Continuous trading only Pegged to: Best Bid or Best Offer or Mid-Price [Full func in FIX only] Minimum Execution Size (MES) Included in auction, but: MES condition will not apply [FIX Only] 19

20 Hidden buy order C pegged to best bid + 5 Number of buy orders at best price Volume at best price Best bid Best offer Volume at best offer price Number of sell orders at best price BUY SELL Time Volume MES Price/Peg Price/Peg MES Volume Time Order C Order A 10: Best Bid Peg :24 +5=320 10: Order B Green shading indicates the order is hidden 20

21 New order D with new best bid BUY SELL Time Volume MES Price/Peg Price/Peg MES Volume Time Order C 10: Best Bid Peg +5= :24 Order B Order D 10: Order A 10: BUY SELL Time Volume MES Price/Peg Price/Peg MES Volume Time Order D Order A 10: :24 10: Order B 21

22 Other order types (1) Validity Execute and eliminate (ENE) Fill or Kill (FOK) Good-till-cancelled (max 90 days) (GTC) Good-till-time (GTT) At the Close (ATC) / At the Open (ATO) Good for Auction (GFA) / Good for Day (GFD) Dealing capacity Agency or Principal Client Reference Not required by Oslo Børs, but: Mandatory when Agency dealing capacity Must be unique across ref specification 22

23 Other order types (2) Lot size 1 Order Types (Market Mechanism) Limit Orders Market Orders Included in auctions; otherwise non-persistent in order book Named Orders = Limit Order with ID 23

25 Order Execution - Auctions Auction Call period Price: Transparency Market-by-Order Indicative price is disseminated Maximum executable volume Including Market, Hidden and Hidden/MES orders; Zero or more auction extension periods Up to two price monitoring extensions (PME) if price movement threshold is breached; and/or One market order extension (MOE) if there are market orders which will not execute Uncross At a random time within 30 sec interval Random sequence of instruments (Open/Close) 25

41 Communication networks Norwegian customers - Customers based in Norway will be connected through upgraded services in existing networks UK and continental customers - LSE s current network ExtraNex will be used as connection Customers in other Nordic countries - Customers currently using OMNet will be offered a new network - The new network will be connected via Stockholm 41

47 Conformance testing Purpose Ensure that a stable system is in operation between the customers and the exchange Mandatory Trading Information High volume Dates Separate test environment Start October 2009 Finnished before Dress Rehearsals 47

49 CDS Customer Development Services Purpose Dates Support customer development and testing Upgraded and updated for Oslo Børs Plan for access when network is ready Live service Procedure Simulation of live services Model Based Testing (special cases and scenarios) Documentation CTS Two Series 49

50 Other Orderbook Simulator Tool available for licensing Support development and testing without access to a live environment Testing at home (24/7) Support Integratet service lines will be established 50

51 Analysis and preparations Specifications Baseline: Current LSEG documentation To be updated with Oslo Børs specific information Amendments during the migration project Customer system configuration Adaptations Applications to be replaced Applications to be ended New business opportunities Network preparations Required for access to test and development services, and for production Information feedback We will request information needed for enablement etc. 51

52 Communication and Process Lisbeth Lindberg

53 Cooperation with members and other stakeholders Consultations groups - We have established reference groups with NSDA - We have contacted NSA and LIBA Buy side is invited to participate in consultations Topics for consultations - Market models equities and fixed income to be concluded medio June - Trading rules to be concluded medio January Technical changes - We have established a reference group together with NSDA - ISV cooperation

55 Communication during migration process All important material will be posted on Technical helpdesk will open ultimo April 2009 Technical user groups meetings will be organised - Members, vendors and ISVs will be invited - Information in advance of important events One-on-ones are important in our dialogue with customers 55

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